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Economic Theory

2. When prices rise slowly and predictably, we call that:
a) low inflation;
b) galloping inflation;
c) hyperinflation;

d) deflation.
3. When inflation is in the double or triple digits, we call that:

a) galloping inflation;
b) low inflation;
c) hyperinflation;
d) deflation.

4. When inflation is at a million or trillion percent per year, we call
that:

a) hyperinflation;
b) galloping inflation;
c) low inflation;
d) deflation.

5. Demand-pull inflation occurs when:
a) aggregate demand rises more rapidly than the economy's

productive potential;
b) imports exceed exports;
c) both a and b;
d) neither a nor b.

Fill-in Questions

Choose the right word to complete the sentences:

1) rise, 4) modern, 7) increases, 10) happen,
2) prices, 5) metallic, 8) bills, 11) accounts,

3) supply, 6) purchasing, 9) scarcity, 12) rapidly.

1. Most ______ money has little intrinsic, or “commodity”, value.

2. Aside from their value as money, ______ of paper currency are just
pieces of paper, and balances in checking ______ at depository institutions
are just entries in the memories of their computers.

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